A recent report conducted by Callaghan Innovation on “Founder Well Being” revealed that almost one in every two of founders had experienced or witnessed inappropriate behaviours in the start-up ecosystem in Aotearoa New Zealand. Photo / 123RF
A recent report conducted by Callaghan Innovation on “Founder Well Being” revealed that almost one in every two of founders had experienced or witnessed inappropriate behaviours in the start-up ecosystem in Aotearoa New Zealand. Photo / 123RF
OPINION
On December 7 I was sent a link to the Office of the Auditor-General’s report on its “Inquiry into Callaghan Innovation’s procurement process” as it related to a complaint laid by an organisation called Manaaki/We Are Indigo.
In this surprisingly detailed online media platform, posing as a media release,the Auditor-General packages his report into six conveniently summarised attention-grabbing chapters, to which are added six timelines, two appendices and a video (helpfully labelled – “without music”) where it seems to me he basically interviews himself.
I assume I was sent this link because of my initial involvement in this case where a number of startup founders had claimed that they had been subjected to what they described as “unethical behaviour, including bullying, harassment, and sexism,” in their dealings with Manaaki/We Are Indigo.
Given that much of the Auditor-General’s report dealt with a “potential conflict of interest” it is important that I declare mine.
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I was one of the first people to have been sent copies of the due diligence reports that contained, not only personal accounts of the way founders claimed they had been treated, but also evidence of emails that I believe reinforced some of their claims.
What I read I found to be disturbing to say the least. If true, then there were serious questions that needed to be asked, but I think those questions needed to be asked by an independent authority. I suggested a retired High Court judge who the young founders might feel they could trust.
This was important because, in confidential discussions I had with some of the founders named in the due diligence report, the common thread was they didn’t want to speak out publicly because they felt they were up against the “big boys” and no one would believe them.
I can only imagine how that founder felt upon reading the Auditor-General’s Overview to his report where he said:
“We understand that founders in the innovation sector can sometimes (italics added) find themselves in vulnerable situations because of the power imbalance between them and more established investors and directors.”
“Sometimes?”
A recent report conducted by Callaghan Innovation on “Founder Well Being” revealed that almost 1 in every 2 (49 per cent) of founders had experienced or witnessed inappropriate behaviours in the start-up ecosystem in Aotearoa New Zealand.
Sir Ian Taylor has written about matters concerning a report from the Auditor-General.
How must those founders feel as they see where the auditor-general has placed his priorities in this report when he provides statements such as this:
“It is important that public organisations use procurement processes that support public trust and confidence in how public money is spent.”
I would argue that was exactly what Callaghan Innovation attempted to do with its due diligence report!
But rather than examine the validity of the claims made by young founders, this report focused entirely on a claim made by the very people the founders claimed had conducted the unethical behaviour that Callaghan Innovation was attempting to protect them against.
Imagine being one of the 49 per cent of young founders who “had experienced or witnessed inappropriate behaviours” seeing the first attempt by a government agency to take their concerns seriously having those efforts described by the auditor-general in this way, (emphasis added):
“The desire to protect founders was “well-intentioned” and a more intensive due diligence was “reasonable”.
Why, they might well ask, could he have not used words like “essential”and “non-negotiable” to give them confidence that he had their back?
Instead, the founders rarely rate a mention, but when they are mentioned the suggestion is that their claims are unsubstantiated by other witnesses so cannot be relied on. This, from the auditor-general:
“Guidance on due diligence for public sector procurement is limited, but I question whether a reasonable observer would find it acceptable to make decisions based on allegations without considering whether those allegations can and should be verified first, regardless of what guidance is available.”
However, the terms of reference the auditor-general set himself meant that he did not investigate any of the claims made by the founders against Manaaki/We Are Indigo, placing instead the focus solely on the due diligence process that uncovered the allegations, effectively removing the founders from what I believe is an important and long overdue investigation into the start-up ecosystem in New Zealand.
I don’t imagine that too many people have read the report in its entirety. I have.
I accept I am not an expert in reviews such as these but I was surprised to see how frequently the auditor-general used the term - “In my view ….”. He used it 14 times, and what surprised me most was it looked like he seemed to use it to dismiss “evidentially” based opinions that had been provided to him that appeared to run counter to his view.
The most important of these “in my views” goes to the core of the complaint laid with the OAG that there had been a conflict of interest involving a private investigator. The PSPLA (Private Security Personnel Licensing Authority) is the official body that investigates all complaints made against its members and earlier it had dismissed, in its entirety, a complaint made by Manaaki/We Are Indigo against the private investigator who they claimed had a conflict of interest and was biased against them. But, in the auditor-general’s view, that considered opinion, by a group of experts, was not sufficiently sound enough to override his personal view which he provided without any evidential support.
Another of “his views’” was that Callaghan was in breach of confidentiality clauses by sharing the due diligence reports with other public organisations. I am pretty sure that if I signed an agreement that contained this clause, which was what Manaaki signed, I would be pretty clear about what it meant.
“To facilitate discussions between the Buyer and third parties each Respondent waives any confidentiality obligations that would otherwise apply to information held by a third party, with the exception of commercially sensitive pricing information,” the clause reads.
There are other examples of reports seemingly being side-lined in favour of the auditor-general’s views, but how would anyone know when the report has been presented in a way that doesn’t actually highlight that there are other views that might be equally legitimate.
The overriding impact of such a carefully managed media release is that it has successfully moved the discussion away from the alleged activities that created the need for a due diligence process, placing instead the focus solely on the process by which those alleged activities were uncovered. In my opinion, the founders have become pawns in a power game they have little to no influence on.
The headlines picked up as a result of this report simply reinforces their sense of despair.
“The auditor-general delivered a devastating critique of the conduct of Callaghan Innovation and its former chief executive, Victoria Crone.”
The founders’ claims appear to me to have been totally ignored, not only by this report, but by the media in general who have uniformly picked up on a message, admittedly handed to them on a plate, that this was only about “process” - never about the impact on the well-being of the young entrepreneurs whose success is so important to the future of the country.
If they needed any evidence at all of the power imbalance that I believe Callaghan tried to address, they see it now as Manaaki/We Are Indigo use this report to claim they have been completely vindicated.
Yes – there were certainly lessons to be taken from the process undertaken by Callaghan, but until the founders are listened to, in a way that is fair, just and safe, I believe the claim that Manaaki/We Are Indigo have been vindicated by this report is not one any of us should be prepared to accept or applaud.
Sir Ian Taylor is the founder and managing director of Animation Research.
